Correlation Between IShares Dow and GraniteShares
Can any of the company-specific risk be diversified away by investing in both IShares Dow and GraniteShares at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IShares Dow and GraniteShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Dow Jones and GraniteShares 3x Short, you can compare the effects of market volatilities on IShares Dow and GraniteShares and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IShares Dow with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Dow and GraniteShares.
Diversification Opportunities for IShares Dow and GraniteShares
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and GraniteShares is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding iShares Dow Jones and GraniteShares 3x Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 3x Short and IShares Dow is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on iShares Dow Jones are associated (or correlated) with GraniteShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 3x Short has no effect on the direction of IShares Dow i.e., IShares Dow and GraniteShares go up and down completely randomly.
Pair Corralation between IShares Dow and GraniteShares
Assuming the 90 days trading horizon IShares Dow is expected to generate 22.91 times less return on investment than GraniteShares. But when comparing it to its historical volatility, iShares Dow Jones is 57.69 times less risky than GraniteShares. It trades about 0.09 of its potential returns per unit of risk. GraniteShares 3x Short is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 10,400 in GraniteShares 3x Short on September 4, 2024 and sell it today you would lose (8,720) from holding GraniteShares 3x Short or give up 83.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
iShares Dow Jones vs. GraniteShares 3x Short
Performance |
| Timeline |
| iShares Dow Jones |
| GraniteShares 3x Short |
IShares Dow and GraniteShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Dow and GraniteShares
The main advantage of trading using opposite IShares Dow and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Dow position performs unexpectedly, GraniteShares can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in GraniteShares will offset losses from the drop in GraniteShares' long position.| IShares Dow vs. iShares MSCI Japan | IShares Dow vs. iShares JP Morgan | IShares Dow vs. iShares MSCI Europe | IShares Dow vs. iShares Nasdaq Biotechnology |
| GraniteShares vs. Vanguard FTSE Developed | GraniteShares vs. Leverage Shares 2x | GraniteShares vs. Amundi Index Solutions | GraniteShares vs. Amundi Index Solutions |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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